As the deepening recession is forcing businesses to pull back spending on marketing and advertising, Travelers and The Hartford recently bucked that trend by committing millions of dollars to athletic sponsorships.
Travelers Inc. recently extended its title sponsorship of Connecticut’s PGA Tour event, the Travelers Championship, through 2014, while The Hartford inked a deal to sponsor Richard Childress Racing and driver Clint Bowyer at three NASCAR Sprint Cup Series races this year.
It’s a decision that advertising experts say could have mixed results, either strengthening their corporate brand identity, or raising questions over what some would consider unnecessary spending.
Their sponsorships come at a time when corporations across the country are opting out of or cutting back on professional sports contracts as they face pressure to reduce costs due to severe financial losses.
Travelers has weathered the financial crisis fairly well, earning $801 million in profits during the fourth quarter, but The Hartford has been hit hard financially, forcing layoffs and their request for federal bailout money.
Sign Of Strength
Marketing experts say Travelers’ commitment to the PGA Tour demonstrates a sign of strength and stability that could lead to market share gains, while Hartford’s sponsorship could lead to a short-term public relations hit, but a long-term step toward economic recovery.
“Keeping your brand front and center in a downturn is vital to longer term success,” said Bill Field, president of Mintz & Hoke Communications Group in Avon. “Studies have proven that companies that aggressively market in recessions are able to gain and steal market share coming out the other side.”
Sponsoring a PGA Tour event typically costs about $3 million to $8 million.
Andy Bessette, executive vice president and chief administrative officer of Travelers, said sponsoring the tournament allows the company to attract and retain potential clients by bringing in over 3,000 insurance agents, brokers and customers to experience the event.
Brand Awareness
“During tough economic times it’s even more important to get your name out there and let people know who you are and what you do,” Bessette said. “It’s all about brand awareness.”
Partnering with the PGA Tour is especially useful because golf is the No. 1 game in the insurance industry, and Travelers is a prominent insurer of golf courses in the U.S., Bessette said.
Field agrees that the partnership makes perfect sense.
“The name and brand association of Travelers with the PGA Tour makes a bold statement about the strength of Travelers from a financial and brand perspective,” he said. “They own the state of Connecticut for a couple of weeks, which makes a statement that Travelers will be a strong player when the dust settles.”
Big Spenders
But sports sponsorships can also be viewed as excessive when a company is losing millions of dollars, or asking for a government bailout, experts said.
Citigroup Inc., for example, has been criticized for paying $400 million to put its name on the New York Mets’ new ballpark, and seven other banks that received government funds may face questioning by Congress for spending hundreds of millions of dollars on other stadium sponsorships.
The Hartford will not be spending nearly as much as bailed-out banks on their sponsoship, but they have asked for $3.4 billion from the federal government’s rescue plan.
In addition to sponsoring NASCAR, The Hartford is also a major sponsor of NCAA basketball.
Connie Weaver, senior vice president of marketing and communications at The Hartford, said corporate sponsorships allow the company to raise awareness for the company’s brand, meet new clients, start new sales campaigns and participate in philanthropic activities.
“Whether you are in a downturn or not brand awareness is absolutely crucial,” said Weaver, who wouldn’t disclose exactly how much the company is spending on the sponsorship. “Getting on the radar screen is important.”
The Hartford experimented with NASCAR last year, sending NASCAR-branded materials to potential customers. They saw higher than normal response rates on those applications, which encouraged the company to ratchet up its relationship with the sport, Weaver said.
“It’s one of the most widely viewed and fastest growing sports, so we see it as a natural fit,” Weaver said.
Faith In Future
Andrea Obston, of Andrea Obston Marketing Communications in Bloomfield, said that companies must balance marketing expenses with what’s happening internally.
“If a company is struggling financially, they should keep a low profile on sponsorships,” she said. “You can shoot yourself in the foot because there could be some backlash to it.”
But Obston also said that companies who do advertise during tough times are also showing tremendous faith in the future which can enable them “to hold on and take market share.”
Steve Wolfberg, partner and president of Cronin and Co., a marketing communications firm in Glastonbury, said The Hartford is making the right decision to continue to market itself.
“It could be a bit of a PR hit in the short-term, but putting money into marketing during a downturn is a good investment long term,” he said. “There certainly could be a backlash, but companies need to continue to market themselves.”
